Commercial and Multifamily Construction Starts in 2018 Showed Mixed Performance Across Top Metropolitan Areas

Gains reported for New York, Washington DC, Boston, and Miami

NEW YORK–(BUSINESS WIRE)–The leading U.S. metropolitan areas for commercial and multifamily
construction starts registered a varied performance during 2018 compared
to the previous year, according to Dodge Data & Analytics. Of the top
ten markets, ranked by the dollar amount of construction starts, four
reported greater activity in 2018 while six showed declines. For the
metropolitan areas ranked 11 through 20, seven reported gains while
three reported declines. At the national level, the volume of commercial
and multifamily construction starts in 2018 was $212.4 billion, up 4%,
which represented a moderate rebound after a 3% setback in 2017.


The New York NY metropolitan area, at $28.7 billion in 2018, continued
to be the leading market in the U.S. for commercial and multifamily
construction starts, advancing 10% after its 13% drop in 2017. New York
NY’s share of the U.S. total was 14% in 2018, up from 13% in 2017,
although not as high as its peak 19% share reported in 2015. The next
three markets in the 2018 top ten all showed gains relative to 2017 –
Washington DC ($9.5 billion), up 28%; Boston MA ($9.2 billion), up 72%;
and Miami FL ($8.2 billion), up 19%. The remaining six markets in the
top ten with their declines relative to 2017 were – Los Angeles CA ($7.0
billion), down 11%; Dallas-Ft. Worth TX ($6.9 billion), down 16%;
Chicago IL ($6.7 billion), down 1%; San Francisco CA ($6.0 billion),
down 18%; Atlanta GA ($5.7 billion), down 14%; and Seattle WA ($5.7
billion), down 14%.

For the metropolitan areas ranked 11 through 20, the seven showing
greater activity in 2018 relative to 2017 were – Houston TX ($4.5
billion), up 9%; Austin TX ($4.0 billion), up 22%; San Diego CA ($3.1
billion), up 12%; Minneapolis-St. Paul MN ($3.0 billion), up 16%;
Phoenix AZ ($2.8 billion), up 5%; Kansas City MO-KS ($2.8 billion), up
46%; and Sacramento CA ($2.3 billion), up 44%. The three metropolitan
areas in this group with decreased dollar amounts of commercial and
multifamily starts in 2018 were – Philadelphia PA ($4.0 billion), down
6%; Denver CO ($2.8 billion), down 23%; and Orlando FL ($2.6 billion),
down 19%.

The commercial and multifamily total is comprised of office buildings,
stores, hotels, warehouses, commercial garages, and multifamily housing.
Not included in this ranking are institutional building projects (e.g.,
educational facilities, hospitals, convention centers, casinos,
transportation terminals), manufacturing buildings, single family
housing, public works, and electric utilities/gas plants. The 4%
increase for commercial and multifamily construction starts at the U.S.
level in 2018 reflected greater activity for multifamily housing, up 8%
to $95.1 billion, and the commercial building categories as a group, up
1% to $117.3 billion. Multifamily housing in 2017 had fallen 8% after
appearing to have reached a peak in 2016, before posting the 8% rebound
in 2018. After surging 23% in 2016, commercial building starts have
shown slight improvement, edging up 1% in both 2017 and 2018.

“The brisk expansion for the U.S. economy during 2018 enabled market
fundamentals for commercial building and multifamily housing to
strengthen, after having shown some erosion during the previous year,”

                 
                                 
 

Top U.S. 20 Metropolitan Areas – Full Year 2018

Commercial Building and Multifamily Housing Construction Starts

Millions of Dollars
Percent Percent
Change Change

2015

2016

2017

2018

’17/’16

’18/’17

1. New York-No. New Jersey-Long Island, NY-NJ-PA 34,515 29,847 26,026 28,749 -13 +10
2. Washington-Arlington-Alexandria, DC-VA-MD-WV 6,301 8,749 7,426 9,505 -15 +28
3. Boston-Cambridge-Quincy, MA-NH 4,777 7,333 5,355 9,198 -27 +72
4. Miami-Fort Lauderdale-Miami Beach, FL 6,644 8,301 6,869 8,192 -17 +19
5. Los Angeles-Long Beach-Santa Ana, CA 7,118 9,883 7,916 7,011 -20 -11
 
6. Dallas-Fort Worth-Arlington, TX 7,158 9,156 8,218 6,867 -10 -16
7. Chicago-Naperville-Joliet, IL-IN-WI 6,481 9,508 6,710 6,654 -29 -1
8. San Francisco-Oakland-Fremont, CA 2,888 5,647 7,350 5,999 +30 -18
9. Atlanta-Sandy Springs-Marietta, GA 3,349 5,263 6,592 5,679 +25 -14
10. Seattle-Tacoma-Bellevue, WA 4,694 6,033 6,550 5,664 +9 -14
 
11. Houston-Baytown-Sugar Land, TX 4,674 3,937 4,122 4,511 +5 +9
12. Austin-Round Rock, TX 2,677 3,100 3,281 4,011 +6 +22
13. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2,612 3,174 4,251 4,001 +34 -6
14. San Diego-Carlsbad-San Marcos, CA 1,654 2,430 2,745 3,072 +13 +12
15. Minneapolis-St. Paul-Bloomington, MN-WI 1,708 2,584 2,584 3,000 -0- +16
16. Phoenix-Mesa-Scottsdale, AZ 2,202 3,046 2,719 2,846 -11 +5
17. Denver-Aurora, CO 3,053 4,323 3,664 2,829 -15 -23
18. Kansas City, MO-KS 1,903 2,747 1,887 2,759 -31 +46
19. Orlando, FL 2,105 2,389 3,165 2,570 +32 -19
20. Sacramento–Arden-Arcade–Roseville, CA 717 600 1,595 2,302 +166 +44
 
Total U.S. 180,797 211,448 204,966 212,375 -3 +4
 
    Source: Dodge Data & Analytics                            
 

stated Robert A. Murray, chief economist for Dodge Data & Analytics.
“This provided the backdrop for the healthy volume of commercial and
multifamily construction starts that took place during 2018. A further
boost came as a number of very large projects reached groundbreaking
last year. For office buildings, this included such projects as the $1.8
billion Spiral office building in the Hudson Yards district of New York
NY, a $665 million office building on North Wacker Drive in Chicago IL,
and the $644 million office portion of the $1.3 billion Winthrop Square
Tower in Boston MA. Large data center project starts, which are included
in the office category, were also very strong in 2018, with the
Washington DC area seeing the start of eleven such projects valued at a
combined $1.6 billion. Hotel construction starts in 2018 were led by
such projects as the $643 million hotel portion of the $1.5 billion
Manchester Pacific Gateway mixed-use complex in San Diego CA and the
$450 million Omni Seaport Hotel in Boston MA. The rebound for
multifamily housing in 2018 was supported by such projects as the $700
million City View Tower at Court Square and the $600 million 85 Jay
Street high-rise, both in the New York NY metropolitan area, as well as
the $580 million multifamily portion of Boston’s Winthrop Square Tower
and the $429 million multifamily portion of Seattle’s 1200 Stewart
Street mixed-use high-rise.”

“For 2019, the economic environment may not be quite as supportive to
commercial and multifamily construction starts as what took place during
2018,” Murray continued. “The benefits of tax reform on economic growth
are expected to wane, which may also dampen occupancies and rent growth,
particularly as the supply of commercial and multifamily space rises
with the completion of projects that reached groundbreaking in recent
years. Furthermore, the most recent survey of bank lending officers
conducted by the Federal Reserve suggests that a more cautious lending
stance emerged during the latter half of 2018, especially with regard to
loans for multifamily projects.”

The New York NY metropolitan area in 2018 registered a 10% gain
for commercial and multifamily construction starts to $28.7 billion,
bouncing back after a 13% drop in 2017. Most of the upward push came
from the commercial project types, which climbed 22% after sliding 27%
in 2017. Office construction starts advanced 22% in 2018, led by
groundbreaking for the $1.8 billion Spiral office building and the $480
million addition to the Hudson Commons office building, both in the
Hudson Yards district of Manhattan. Other noteworthy office starts were
the $250 million gut rehabilitation of the former Domino Sugar Factory
and the $233 million office portion of the $300 million One Willoughby
Square mixed-use development, both in Brooklyn. New hotel construction
starts were particularly strong in 2018, jumping 118% with the lift
coming from the $300 million Tribeach Holdings Hotel in Manhattan and
the $218 million hotel portion of the $400 million Resorts World Casino
and Hotel expansion in South Ozone Park. Store construction starts
improved 4% in 2018, reflecting groundbreaking for a $70 million
shopping center in Staten Island, while new warehouse construction
starts retreated 27%. Multifamily housing in the New York NY
metropolitan area edged up 2% in 2018 following a 1% gain in 2017, as
construction starts have shown slight growth since the 27% correction
that was reported back in 2016. Leading the way for multifamily housing
in 2018 was the $700 million City View Tower at Court Square and the
$550 million Queens Plaza Park Apartments in the Long Island City
section of Queens, the $600 million 85 Jay Street and the $375 million
Hoyt Street high-rises in Brooklyn, and the $250 million Journal Squared
2 high-rise in Jersey City NJ. During 2018, there were 24 multifamily
projects valued at $100 million or more that reached groundbreaking, the
same as the 24 such projects that reached groundbreaking in 2017.

After sliding 15% in 2017, the Washington DC market rebounded 28%
to $9.5 billion in 2018, with similar construction start gains for
commercial building, up 30%; and multifamily housing, up 26%. The
commercial upturn was led by a strong performance for the office
category, rising 36% with the lift coming from eleven data center
projects totaling $1.6 billion located in northern Virginia. In
addition, there were several more typical office building projects that
reached groundbreaking in 2018, led by the $475 million office portion
of the $600 million Marriott Headquarters and Hotel in Bethesda MD, the
$245 million U.S. Citizenship and Immigration Services building in
Suitland-Silver Springs MD, and the $160 million M Street NW office
building in Washington DC. The hotel category climbed sharply in 2018,
with construction starts rising 194% as the boost came from the $77
million hotel portion of Bethesda’s Marriott Headquarters and Hotel and
a $50 million renovation of the W Hotel in Washington DC. Warehouse
construction starts in 2018 increased 46%, while store construction
starts were flat. The 26% increase for multifamily housing in 2018
followed a 23% decline in 2017. There were five multifamily projects
valued at $100 million or more that reached groundbreaking in 2018, led
by the $380 million Highlands residential towers in Arlington VA and the
$185 million Apex residential towers in Bethesda.

The Boston MA metropolitan area surged 72% to $9.2 billion in
2018, following a 27% decline for commercial and multifamily
construction starts in 2017. Similar gains were reported for commercial
building, up 73%; and multifamily housing, up 71%, as groundbreaking for
the $1.3 billion Winthrop Square Tower in Boston boosted both
construction segments. Office construction starts in 2018 increased
102%, led by the $644 million office portion of the Winthrop Square
Tower. Additional large office projects that started in 2019 were a $150
million office building in Cambridge and an $88 million office building
addition in Boston. The hotel category climbed 139% in 2018, led by the
$450 million Omni Seaport Hotel in Boston. Store construction starts
improved 38% in 2018, while warehouse construction starts retreated 26%.
The 71% jump for multifamily housing in 2018 came after a 32% decline in
2017. There were seven multifamily projects valued at $100 million or
more that were reported as construction starts in 2018, led by these
Boston projects – the $580 million multifamily portion of the Winthrop
Square Tower, the $215 million Garden Garage apartment building, and the
$188 million 159 Washington St. multifamily complex.

Commercial and multifamily construction starts in the Miami FL
metropolitan area increased 19% to $8.2 billion in 2018, strengthening
after a 17% drop in 2017. The upward push come from multifamily housing
which rebounded 43% following its 45% slide in 2017. There were 11
multifamily projects valued at $100 million or more that reached
groundbreaking in 2018, compared to five such projects in 2017. The
largest multifamily projects in 2018 were the $300 million One River
Point condominium tower and the $213 million Aston Martin Residences,
both in Miami, and the $165 million multifamily portion of the $330
million Las Olas Avenue mixed-use building in Ft. Lauderdale. Commercial
building construction starts improved 1% in 2018, rising slightly after
stronger growth in 2016 (up 28%) and 2017 (up 37%). Office construction
starts advanced 21%, lifted by the $139 million office portion of Ft.
Lauderdale’s Las Olas Avenue mixed-use building and the $75 million
office portion of the $225 million The Plaza Coral Gables mixed-use
complex in Coral Gables. Warehouse construction starts in 2018 increased
29%, while store construction starts retreated 16%. Hotel construction
starts in 2018 fell 27% after a 95% hike in the previous year that
included the $575 million hotel portion of the $900 million Seminole
Hard Rock Hotel and Casino expansion in Hollywood FL. Large hotel
projects that reached groundbreaking in 2018 were led by the $83 million
hotel portion of the $150 million Turnberry Isle JW Marriott Hotel and
Conference Center in Aventura FL.

The Los Angeles CA metropolitan area dropped 11% to $7.0 billion
in 2018, as commercial and multifamily construction starts retreated for
the second year in a row after the 20% decline in 2017. Decreased dollar
amounts of construction starts in 2018 were reported for commercial
building, down 12%; and multifamily housing, down 11%. The commercial
building downturn in 2018 was less pronounced than its 22% drop in 2017,
which came after 38% increases in both 2015 and 2016. Office
construction starts in 2018 slipped a relatively modest 2%, as support
came from the $145 million office portion of the $225 million Academy
Square office complex in Los Angeles and the $85 million office portion
of the $127 million Culver Studios office and support facilities in
Culver City. More substantial declines were reported for warehouses,
down 17%; store construction, down 38%; and hotel construction, down
43%. The commercial garage category did register a 16% gain, boosted by
the start of a $135 million parking structure at Disneyland in Anaheim,
plus the garage portion of several large office and multifamily
projects. The 11% multifamily decline in 2018 followed an 18% slide in
2017, as this project type continued to settle back from the elevated
activity reported in 2016. There were six multifamily projects valued at
$100 million or more that reached groundbreaking in 2018, compared to 11
such projects in 2017. The large multifamily projects in 2018 were led
by the $363 million multifamily portion of the $411 million Cumulus
Apartments mixed-use complex in Los Angeles and the $342 billion
multifamily portion of the $400 million Los Olivos Apartments mixed-use
complex in Irvine.

Following a 10% decrease in 2017, commercial and multifamily
construction starts in the Dallas-Ft. Worth TX metropolitan area
fell for the second straight year in 2018, retreating 16% to $6.9
billion. The downturn came as the result of a 35% decline for commercial
building, while multifamily housing moved in the opposite direction with
a 24% increase. The reduced activity for commercial building in 2018 was
the result of diminished construction starts across each of the
individual categories, including office buildings, down 48%; and hotels,
down 51%. In 2017, the office category had included the start of two
large projects in Ft. Worth – a $300 million Facebook data center and
the $300 million American Airlines Trinity Campus. The largest office
projects entered as construction starts in 2018 were a $183 million
Facebook data center in Ft. Worth and the $52 million Independent Bank
corporate headquarters in McKinney. Store construction starts in 2018
were down 17%, while warehouse construction starts slipped 10%. The
warehouse category did feature the start of several large projects in
2018, including the $71 million Gateway Logistics Center at DFW
International Airport and the $70 million Golden State Foods
distribution facility in Burleson. The 24% increase for multifamily
housing in 2018 showed activity rebounding after a 20% decline in 2017.
The largest multifamily projects that reached groundbreaking in 2018
were the $232 million Atelier/Flora Lofts apartment tower and the $215
million Victory Park apartment tower, both in Dallas; and the $165
million Davis apartment complex in Frisco.

The Chicago IL metropolitan area experienced a slight 1%
reduction to $6.7 billion for commercial and multifamily construction
starts in 2018. While multifamily housing retreated 28% in 2018,
commercial building almost offset that decline with a 31% increase.
Multifamily housing has now fallen for two years in a row, following the
robust dollar amount that was reported back in 2016 which featured
several massive projects, led by the $780 million multifamily portion of
the $900 million Wanda Vista Tower. There were three multifamily
projects valued at $100 million or more that reached groundbreaking in
2018, compared to five such projects in 2017 and nine such projects in
2016. The largest multifamily project in 2018 was the $150 million
condominium project involving the adaptive-reuse of Chicago’s Tribune
Tower. The 31% increase for commercial building reflected a 67% jump for
office construction starts, which featured the start of these Chicago
projects – a $665 million office building on North Wacker Drive and a
$181 office building on West Wayman Street. The commercial garage
category rose 54%, helped by the start of a $130 million parking
expansion at Midway International Airport. Warehouse construction starts
increased 33%, but declines were reported in 2018 for store construction
starts, down 13%; and hotel construction starts, down 18%.

The 18% decline to $6.0 billion for the San Francisco CA
metropolitan area in 2018 came after a 30% gain for commercial and
multifamily construction starts in 2017. The overall pattern was shaped
by the swing shown by commercial building – up 60% in 2017, followed by
a 46% decline in 2018. The office category in 2018 fell 75% following
its 134% hike in 2017 that reflected the start of the $780 million
office portion of the $1.3 billion Oceanwide Center Tower in San
Francisco and the $568 million Stanford University Redwood City office
campus. In contrast, the two largest office projects in 2018 were
smaller in scale – a $230 million Facebook office building and the $157
million Menlo Gateway Park office complex, both located in Menlo Park.
An additional steep decline was registered by store construction starts,
down 52%, while gains were reported for warehouses, up 30%; and hotels,
up 130%. The hotel jump reflected groundbreaking for the $250 million
Grand Hyatt Airport Hotel at San Francisco International Airport and the
$112 million Berkeley Place Hotel in Berkeley. Multifamily housing
stayed on the upward track in 2018, rising 23% and marking the third
straight annual increase. There were six multifamily projects valued at
$100 million or more that reached groundbreaking in 2018, led by two
projects in Oakland – the $265 million 39th Street apartment tower and
the $200 million Franklin Street apartment tower.

The Atlanta GA metropolitan area experienced a 14% pullback to
$5.7 billion for commercial and multifamily construction starts in 2018,
following a 25% increase in 2017. Both commercial building and
multifamily housing showed reduced activity compared to 2017, falling
10% and 19% respectively. The commercial total was restrained by steep
declines for stores, down 30%; and warehouses, down 38%. At the same
time, office construction was able to rise 2% on top of the 27% hike
reported in 2017, with much of the boost coming from the start of a $750
million Facebook data center in Covington. Other noteworthy office
projects that reached groundbreaking in 2018 were the $120 million Star
Metals office building in Atlanta, the $97 million Avalon office
building in Alpharetta, and the $80 million T3 West Midtown office
building in Atlanta. Hotel construction in 2018 rose 29%, reflecting the
start of the $70 million Reverb by Hard Rock Hotel in Atlanta. The 19%
drop for multifamily housing in 2018 followed sharp gains in the
previous two years, with 2016 up 42% and 2017 up 24%. The largest
multifamily projects that reached groundbreaking in 2018 were located in
Atlanta – a $165 million student housing tower, the $137 million West
Marietta Street condominium tower, and the $129 million AMLI Oak Valley
apartment complex.

The Seattle WA metropolitan area fell 14% in 2018 to $5.7
billion, after steady growth for commercial and multifamily starts over
the previous seven years, including a 9% increase in 2017. The
commercial building and multifamily housing segments moved in opposite
directions during 2018, with commercial building dropping 43% while
multifamily housing climbed 25%. After advancing 19% in 2017, helped by
such projects as the $331 million office portion of the $570 million
Rainer Square building in Seattle, office construction starts in 2018
plunged 60%. The largest office projects that reached groundbreaking in
2018 were the $160 million T-Mobile Newport Corporate Center renovation
in Bellevue and the $100 million Dexter Yard office complex in Seattle.
Steep declines were also reported for warehouse construction starts,
down 60%; hotel construction starts, down 45%; and store construction
starts, down 15%. The commercial garage category was the one commercial
project type able to report a gain, rising 22% with the lift coming from
the garage portion of several large multifamily projects and the $46
million garage that’s part of the Washington State Convention Center
expansion. The 25% increase for multifamily housing was supported by the
start of seven projects valued at $100 million or more, compared to
three such projects in 2017. The 2018 multifamily projects were led by
the $429 million multifamily portion of the $516 million 1200 Stewart
Street mixed-use tower, the $398 million multifamily portion of the $450
million Seattle Times mixed-use complex, and the $200 million Wall
Street multifamily tower, all located in Seattle.

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Contacts

Media: Nicole Sullivan | AFFECT Public Relations & Social Media |
+1-212-398-9680, nsullivan@affectstrategies.com

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